European markets are lower this morning on the news that Cyprus has until Monday to come up with a new bailout package. The European Central Bank says it will cut off emergency lending to the nation's bank if there's no deal.
Diane Swonk, chief economist with Mesirow Financial, joins Marketplace Morning Report host Jeremy Hobson to discuss how the situation in Cyprus could affect the global economy.
Cyprus has until Monday to come up with a new bailout package after the parliament rejected the initial plan that called for a controversial tax on the country’s bank deposits. The European Central Bank says it will cut off emergency lending to the country's banks if there is no deal by then.
The BBC's Andrew Walker in Brussels joins Marketplace Morning Report host Jeremy Hobson to discuss what’s next for the troubled island country.
There was a big shakeup this week in the gaming industry when the head of Electronic Arts resigned on Monday after a high-profile debacle involving the new Sim City game.
Ben Johnson of the Marketplace Tech team joins Morning Report host Jeremy Hobson to explain what went wrong with the new game and how the company has responded.
The NCAA men’s basketball tournament kicks off today, and there is big money at stake -- in office pools, of course, and in Washington, where the tournament is a gimmick for politicians raising campaign cash.
At some fundraisers, games will be on TV. Nevada Senator Dean Heller’s political action committee -- Heller High Water PAC -- is hosting a viewing party at The Palazzo in Las Vegas.
Others will be at the games themselves.
“The East Regionals of the NCAA's are happening in Washington, D.C., just blocks from the U.S. Capitol,” Kathy Kieley notes. She’s with the Sunlight Foundation, a nonpartisan group that pushes for government transparency.
The Sunlight Foundation is collecting invites to March Madness fundraisers. The price of admission? According to Kieley, it’s “anywhere from $1,000 to $5,000.”
Political consultant Katy Faulk, with KLF & Company, says that at tournament-themed fundraisers, donors realize they can kill two birds with one stone.
“They can pay to go to the fundraiser and they can still see the game.”
And another consultant, Elizabeth Blakemore, with Blakemore & Associates, says that’s what donors are there for: The game. And if you’re known for throwing a great March Madness fundraiser, donors will come back year after year. So, this kind of event isn’t the time or the place for politicians to speechify.
“Blessed are the brief, because they’ll be reelected,” Blakemore says. “Or they’ll raise more money.”
This is what she tells candidates: “They already support you. Don’t talk them out of it.”
Pressure is piling onto Cyprus. On Tuesday the Cypriot parliament rejected a bailout plan that would have taxed the country’s bank depositors. Now the European Central Bank has upped the ante. It has warned the small island nation that it will cut off the emergency funding that is keeping Cypriot banks afloat if Cyprus does not agree a new deal by Monday.
“This is an attempt by the ECB to pressure the Cypriot authorities to come forward with a different plan to finance their share of the bailout of the Cypriot banking sector,” says Simon Tilford of the Center for European Reform.
This morning the Cypriot president unveiled his revised plan to the country’s political leaders. The proposals are believed to include a bank tax only affecting accounts worth more than $130,000 and a bond issue tied to the country’s natural gas reserves.
Meanwhile, the Cypriot finance minister is still in Moscow pleading for help from the Russians.
New Mexican President Peña Nieto has been making waves since entering office by tackling some of Mexico's toughest issues. One of those issues is the telecommunications industry. President Nieto hopes to reshape the country's phone and television service by increasing competition through foreign investment.
"If Congress approves this, [it] will drive down prices in the telephone market," says Enrique Acevedo of Univision News in Miami. "[It] will bring long awaited programming choices to the Mexican audience who have always had only two choices when it comes to broadcast TV."
The reforms may also improve broadband Internet access, which Acevedo says is long overdue.
"Broadband speed in the International Space Station is actually faster than in Mexico," he notes.
Overall, Acevedo sees the telecommunication reforms as a sign of greater economic momentum in Mexico -- a trend that could have a noticeable impact on the U.S. and the ongoing debate over immigration.
These days, digital cameras are everywhere. In most cases, our phones double as cameras. But when is it right to snap a picture and when is it not? And how do our kids figure in to all of this?
Janell Burley Hofmann, a Cape Cod mother of five who also teaches parenting workshops, joins Marketplace Tech host David Brancaccio to explain this quandary.
Four years is an eternity in the tech world.
Foursquare, an app which lets users check in to physical locations and tell their social media friends about it, has just turned four. CEO and co-founder Dennis Crowley debuted the company back in 2009 at the monthly gathering of New York Tech Meetup.
"This was really the first time we showed the ideas in public. I don't think we even had a prototype, we just had screen shots," remembers Crowley. "But now four years later, we are big, we have 30 million users, 160 people in the company, people have given us 3 billion 'check-ins'."
The next step for Foursquare is how to take all that data and make it into something that helps people discover things in the real world. Crowley says Foursquare is working on ways to predict where willing customers might be 20 minutes later -- and what they might want to know when they get there.
"We know about who your best customers are, we know who the people are who spend a lot of time in the neighborhood, we know whether they've been to your shop," says Crowley. "We think a lot about how we want to monetize the products that we built."
Think custom coupons, for instance. Foursquare was reportedly valued at more than $700 million during a deal last year, but some investors remain skeptical about the company's ability to ultimately generate lots of cash. Also, sites like Yelp, Google and even Facebook are edging in on Foursquare's location-based data mining.
And finally, there’s this irony, courtesy of the man at the helm of a company that depends on digital screens.
"I find it annoying sometimes when people pay more attention to what's on the screen than what's happening in real life," Crowley says. "A big challenge for developers is how do we build these things that are great, but do it in a way that people don't have to be glued to their screens."
South Korea is still recovering from an apparent cyberattack earlier this week that shut down cash machines, froze debit card transactions, and caused computers to go dark at banks and several media outlets. South Korean officials suspect North Korea, but proving that may be difficult. Last week, North Korea had accused the South of getting into its computers.
"All you need is a computer and grudge really to cause tremendous harm to a country's critical infrastructure," says Michael Dubose, head of cyber-investigations at the corporate risk consulting firm Kroll.
North Korea may not be the most technologically sophisticated country, but that's not required for a hack like this, Dubose says.
"On the underground Internet, you can purchase almost any type of software exploit that you can imagine. You can even purchase hackers for the right price," says Dubose.
Reports that the CIA is paying Amazon $600 million to build a private cloud for its top-secret data aren't confirmed. But if it is true, experts say it wouldn't come as a shock to anyone.
"To be one of the top players right now you have to play in a lot of different categories at once, successfully," says Todd Wasserman, business editor at Mashable.com. He says just as Amazon once was strictly an online retailer, Apple used to just sell computers.
"And now they have to compete, and they have to make watches and things like that," says Wasserman.
Sucharita Mulpuru, an analyst at Forrester, says as Amazon grows, it's becoming harder to define.
"So I think there are a lot of questions of you know what sector does it fall in? Is it competitive with retailers? Is it more competitive with a UPS or Fedex? Is it more competitive with an Apple?" Mulpuru says.
The answer? Yes, all of them. But Mulpuru says Amazon's real strength is using things it already has, like extra servers and a huge shipping network, to make even more money.
Among the things we knew when the sun came up this morning were the following: The European Union would still be a mess. I'd spend way too much time on Twitter. And the Federal Reserve wasn't gonna change interest rates at its meeting today.
We were so sure of that fast fact that we prepared a new version of our popular hit game show, Federal Reserve Time Machine. And you get to guess who said what when. We give you the "who"--Ben Bernanke, Chairman of the Fed. He had one of his four times a year press conferences today.
As for when--well that's up to you.
On the topic of inflation:
On the topic of unemployment:
So, which of the previous cuts was today and which one was at his briefing three months ago? Post a comment below with your guess or Tweet us @MarketplaceAPM.
In the natural gas fracking debate, you don't often get oil and gas companies in the same room with environmentalists, let alone joining the same club.
But in Pittsburgh, a new group has drillers voluntarily agreeing to a set of safety standards that outside auditors will police.
You know LEEDS, the stamp of approval for green buildings?
LEEDS for drillers and frackers is kind of the idea for the new Pittsburgh-area partnership of companies and environmental groups.
The Center for Sustainable Shale Development could go by the acronym kissed. And fracking needs some love from a skeptical public.
"The risks can be managed," says Fred Krupp, president of the Environmental Defense Fund. "But that doesn't mean they will be managed. It's going to take a big effort by local citizens, by the state regulators, and by the progressive members of industry."
An industrial industry. It's not just fracking -- sending water and chemicals down a well. It's pipelines, wastewater pits, trucks, odor.
"Well before you get to a fracking location you're likely to be able to smell it," says energy consultant Kent Moors, who also teaches at Duquesne University. "And it's not because of the gas because the gas is odorless. You're really going to be smelling diesel. The huge footprint to run all of that equipment is run on diesel fuel, and that diesel regularly leaks."
The group's new standards call for burning less diesel on wellpads, as well as safe drilling practices, controlling air pollution and taking care of drill fluids and wastewater.
Four companies have volunteered to comply, including Chevron. Regional head Bruce Niemeyer hopes the system wins over nervous western Pennsylvanians who recall the days of coalmining here.
"Many remember prior industrial activities," Niemeyer says, "and have some question in their mind: does this activity take them to a similar place? And understandably we don't want to see any regression."
Critics say they already see regression. Several pollution lawsuits are underway.
It's hard to measure if industry has a community's goodwill. But if it does, Fred Krupp at Environmental Defense Fund argues the product of drilling and fracking -- natural gas -- has upsides.
"There are environmental benefits of using gas over coal," Krupp says. "in terms of cleaner air, less particulates, less sulfur and nitrogen coming out of power plants."
Natural gas spews fewer greenhouse gases than coal, and makes cheap American energy and petrochemicals.
The question is whether third-party certifying will help give industry the public trust to drill and frack long-term.
It’s official -- as of March 20th, the spring real estate season is upon us. And with record low interest rates, we’ve been hearing for months now that there’s never been a better time to buy a home.
Trouble is there’s not much to buy, with inventory at its lowest point in over a decade. The hunt for listings has some realtors trying new tricks and even pulling out some old ones.
In Boston, one of the hottest addresses is the city’s Seaport District. It’s full of trendy new restaurants and warehouses converted to office space and condos. There are plenty of units to rent here, but places for sale are rare. So when a loft opened up in a former bra factory, Realtor Ken Snyder jumped on the listing.
“It’s really huge, just shy of 1500 square feet,” Snyder says, showing off the unit. “So you’ve got the concrete columns, concrete floors, double-height windows, and the exposed HVAC pipes. A lot of people kind of like that aesthetic.”
Snyder says the owners have been renting the loft but were not planning to sell until they saw a post on his Facebook page about the shortage of homes on the market and bidding wars over new listings.
“I’ve been posting kind of my war stories with buyers, saying ‘Hey, you know what, I’ve had six offers on this, seven offers on that, twenty-five offers on this one. Sellers, hello? Where are you?!’” Snyder says. “There’s such little inventory that my joke is it’s like the last shrimp at the buffet at a cocktail party and everyone’s jumping on it to try and get to it.”
Other realtors in the area are holding classes for first-time home sellers, instead of buyers. There are half as many homes on the market in Massachusetts this year as there were before the recession. The National Association of Realtors (NAR) says across the country, inventory hasn’t been this low in 13 years.
“Many of the investors have come into the market, scooped up property at bargain prices hoping to rent it out,” says NAR Chief Economist Lawrence Yun. “The second part is that home building activity has been greatly suppressed for the past 5 years.”
Yun says new home construction is at a 50-year low. One silver lining for sellers -- the inventory shortage is driving up home prices. That’s good news for people whose homes lost value during the housing crisis and the spring market might move some of them to sell.
“There will be some temporary relief, but very temporary, because over the long haul, the true way to add inventory is through new home construction,” says Yun.
So until building picks up, the bottleneck continues. In the suburbs of Boston, Realtor Gary Rogers estimates there are ten buyers for every seller, and to find new listings he’s using tactics that he hasn’t relied on for a decade.
“We’re writing letters to sellers,” he says. “We’re actually going back to snail mail. We used to have these huge mailing campaigns and I’d drop a thousand dollars a month on mail. It used to be junk mail. Now nobody else is doing it, and all the sudden I’m getting calls.”
But there’s still one big problem...
Even when Rogers does find potential sellers, he says a lot of them are afraid to go live with their listings; with such low inventory on the market, they’d have no place to go if their homes sold.
Americans wouldn’t normally pay much attention to a British budget. We have enough budget issues of our own! But when the British Finance Chief unveiled his public spending plans today, at least one prominent American economist must have been watching closely.
Paul Krugman -- Nobel-prizewinning Professor of Economics at Princeton University -- is a keen student of the British economy. And a stern critic of the way it’s been managed. In Krugman's best selling book, End This Depression Now, he argues that Europeans -- including the Brits -- are obsessed with austerity. And that they’re driving their economies into a death spiral … cutting public spending when they should be doing the opposite and boosting growth.
"The British economy, like the U.S. economy, needs to push public investment back up," says Krugman.
"It needs to spend more because this is a special time. This is a once-in-a-three-generations economic crisis. And it’s not a time to be penny-pinching."
Krugman argues that what the Brits have been doing to cut their debt is completely counterproductive. He says that austerity shrinks the economy, reducing tax revenues and increasing government debt. The British government should borrow more to spend more, to spark up the economy.
British Finance Minister Matthew Hancock dismisses that as nonsensical:
"We have a massive borrowing problem. We have overleveraged banks and they’re a drag on the economy. And the argument that you can borrow your way out of debt doesn’t make sense," claims Hancock.
The government and its supporters concede that the deficit reduction plan has hit a sticky patch. They admit that growth has faltered. But they deny that has anything to do with austerity. They blame the recession in the eurozone for weakening Britain’s main export market.
This is not just some academic spat about far-off economies on the other side of the Pond. With the U.S. sequester, this issue may soon come home to roost in America.
Philip Booth of the Institute of Economic Affair says the omens are good. He feels that the U.S., with its flexible economy, may weather the coming austerity better than the Brits.
“You’d expect the U.S. economy to respond pretty well when the government reduces its spending, so that private sector jobs and private sector growth replaced public sector activity pretty quickly,” says Booth.
Paul Krugman may not reach the same conclusion if austerity takes hold in own backyard.
This final note today, which comes with the warning that I'm kind of a space geek -- with a special interest in the Apollo missions.
So I thought this was pretty cool:
Over the past few years, Amazon CEO and founder Jeff Bezos has been paying for folks to float around in the Atlantic Ocean looking for the F-1 engines from the Apollo rockets, the big ones that burned out then fell into the ocean.
The fashion retailer Nieman Marcus had a little run in with the Federal Trade Commission this week. It was one of three companies involved in a settlement over fake fur. It turns out that some Burberry coats they had advertised as faux fur were actually real fur. They were made from an East Asian animal called a raccoon dog.
A raccoon dog is not quite a raccoon and not quite a dog. What it definitely is not, is synthetic, which means it cannot be sold as fake fur.
Humane Society attorney Ralph Henry says the society tested coats in a lab and notified the FTC, when they discoverd that the coats were made from the animal's fur.
"The retailers have agreed to be bound by FTC orders," says Matt Wilshire, a staff attorney for the FTC.
The settlement signed by Nieman Marcus and two other retailers, DrJays.com and Eminent, does not force the retailers to pay any financial penalties. But they are required to accurately label all fur products. And says Wilshire, "if they violate the order on the future they may be subject to penalties."
Part of the problem, according to retail analyst Marshal Cohen, is that manufacturers have gotten really good at making fake fur. "It used to be that when you touched it or got close to it, you could tell that it wasn't real."
As more people shy away from wearing real fur for ethical reason, the demand for this new high quality fake fur is growing. But Cohen says, "there are just not a lot of companies that are producing the faux fur itself."
This has opened up opportunities for other sources of faux fur, like raccoon dog, which according to the law is faux faux fur and should be labeled as such.
The FTC would not comment on where the raccoon dog came from.
It's March Madness time -- and we thought we’d run our own bracket with the top seeded teams.
Being Marketplace, we set out to crown the team with the best state economy, and not the best basketball skills.
Marketplace’s Adriene Hill has the call with help from ESPN’s Rece Davis.
Listen to the audio above to hear the story.
At the same, we also ran the brackets using a few other economic indicators.
Print out the brackets below if you'd like to fill out your guess using data from the U.S. Census or the Bureau of Labor Statistics, instead of by using superstition, mascots, or, you know, actual basketball stats:
The Badgers may feel like they could make it in the actual tournament; South Dakota is probably more of a long shot.
Also, of note, because the unemployment rate in Omaha, Neb., and in Columbia, Mo., are the same -- Creighton and Missouri are a toss-up. You get to pick who you want to advance to the championship game. But both lose to the juggernaut Jackrabbits of South Dakota State University. Print out the unemployment bracket.
On the other hand, if the N.C.A.A. champion was determined by median household income of the surrounding area, St. Mary's College, in Moraga, Calif., would be victorious. The East Bay area suburb has the highest household income statistics.
The high earners in some posh university towns, like Cambridge, Mass., and Berkeley, Calif., allowed those brainier schools to advance further than expected.
And Villanova advanced deep in the tournament -- but that is because the household income of nearby King of Prussia, Penn., helped bump them on. Print out the bracket by median household income.
The United States has officially been out of Iraq for about 15 months. But there are still thousands of American soldiers stationed in the country today, ten years after the first full day of war. All those people, along with thousands of reconstruction projects and programs that we left behind.
The cost of those projects totaled about $60 billion -- that's a bill footed by the American taxpayer. And that money wasn't exactly well-spent, says Stuart Bowen, the Inspector General for Iraq Reconstruction.
"The United States must act to improve, to reform its approach to stabilization and reconstruction operations," he said. "And we are not well organized, well structured to carry them out, to plan them, for that matter, or to oversee them."
Bowen says one crucial lesson learned was, "don't carry out large infrastructure rebuilding programs until sufficient security is established." He said that for the first five years of reconstruction, much of the rebuilding in Iraq used cash to fund it -- something that contributed to the fraud and waste associated with the program. In addition, Bowen critiques the initial contracts to rebuild, calling them a virtual "open checkbook."
Still, Bowen is optimistic about the future. He's confident Congress is listening to his reports even as other issues, like the sequester, demand their attention. And he says it's important the United States gets better at rebuilding nations like Iraq and Afghanistan.
"There's no doubt that we are going to again face substantial stabilization and reconstruction operations in our future, perhaps in the near future, perhaps in Syria," he says.
The bank -- the largest by assets in the U.S. -- says that by late spring, it will stop charging customers repeated overdraft fees in a single month, when one of these online payday lenders keeps trying to pull out automatic payments again and again -- from a checking account that’s already empty. And the bank will train staff to make it easier for customers to stop payments and close accounts that they’ve previously authorized an online payday lender to access for bi-weekly or monthly payments.
All that might have helped 33-year-old office assistant Sharmene Smith of Birmingham, Alabama -- if only her own credit union had put such policies in place a couple years ago. At that point, she had just recently started supporting herself for the first time.
"I guess you could say I was just trying to make it," says Smith. "And I was in a relationship where it was financially draining. I was pretty much the only one working."
Smith, who was then living in Virginia, borrowed $1,600 -- plus more than $500 in fees, plus interest to come out of each payment -- from two different lenders she found online. Both were based out-of-state.
Then, her salary couldn’t keep up.
"They wanted their money and they withdrew it no matter what," Smith says. "And even when I closed the account they kept trying. If it was on the 15th of the month, it was like, the 15th at 1 o’clock, the 15th at 3 o’clock. And I was getting all these overdraft fees."
There are two problems here, say consumer advocates who oppose this type of predatory lending.
First, there are the practices of the online payday lenders -- their outrageously high interest rates and add-on fees, their aggressive collection practices. According to experts at the Virginia Poverty Law Center, where Smith eventually turned for help, much of what she experienced is actually illegal in Virginia, and in more than fifteen other states that have imposed restrictions on high-interest lending or banned it outright. These lawyers say that even though lenders may be based in other states or overseas (many operate out of the Caribbean), state and federal consumer-protection laws where the borrower lives apply.
Second, there is Smith’s own bank -- acting as aider-and-abettor of the online lender. Public-interest attorney Susan Shin of the Neighborhood Economic Development Advocacy Project in New York says mainstream banking institutions are helping online lenders take borrowers’ money, while loading on their own exorbitant fees in the process.
"What we’ve seen is that banks are really trying to profit from this practice of refusing to allow their customers to stop these payments," says Shin. "And they’re charging overdraft fees, $34 a pop, which can add up to hundreds or thousands of dollars, to their low-income customers, which is really harmful for them. They don’t have many resources to begin with. "
Shin’s organization has filed a federal lawsuit against JPMorgan Chase on behalf of two such payday-loan borrowers (Subrina Baptiste and Ivy Brodsky v. JPMorgan Chase). Shin says the federal Electronic Fund Transfer Act requires banks to let customers cancel automatic withdrawals without getting permission from the payday lender and to close accounts even if withdrawals are scheduled or pending.
Shin and advocates at the Virginia Poverty Law Center cited multiple instances in which borrowers had cancelled automatic withdrawals, only to have the lender resubmit the withdrawal in a slightly different amount, or in two equal parts, and have the money transferred out of their account to the lender anyway. In some cases, banks reopened accounts that customers had closed, in order to facilitate online lenders’ withdrawals, even though the customer had rescinded the lender’s authorization to do so.
JPMorgan Chase’s announcement today indicates the bank is at least moving in the direction consumer advocates want.
Virginia-based banking analyst Bert Ely thinks other big banks will follow JPMorgan Chase’s lead as they too come under increased scrutiny and pressure over a variety of consumer banking practices and fees. But Ely doubts this is a major cash-cow for any of the big banks.
"Most people don’t deal with payday lenders, so I doubt how much additional revenue the banks are getting through these overdrafts that arise out of payday lender payments."
Ely believes these customers are actually costly for the banks to service -- as bank compliance officers try to sort out when to let the online payday lenders do their stuff, and when to slam the electronic door shut.
Click here for a clear view on which states allow pay day lendnig.
Healthcare premiums being what they are, companies are trying to bring down costs by encouraging workers to get healthier. Maybe they pick up part of employees' gym membership tab. But the pharmacy chain CVS is planning a wellness program with a twist. CVS will require employees to disclose their weight and other health benchmarks -- or pay $600 more for health insurance.
The data-driven program has inflamed privacy advocates. It’s also an open question as to whether these programs can achieve their goals of making people healthier and saving money.
Still, "wellness is sort of the flavor of the month," says Soeren Mattke, managing director of RAND Health Advisory Services.
CVS is just the latest to serve it up, and it played down the change, saying that many American companies incorporate health assessments into their wellness programs. And, the company says it won't see any personal health data.
Nonethless, this type of program raises red flags for people like Dr. Deborah Peel, founder of Patient Privacy Rights. She worries about the potential for abuse of the data. And she scoffs at CVS’s description of the program as voluntary.
"How many people can afford to have $600 deducted from their paycheck every year?" Peel asks. "Not that many that I know of."
UCLA law professor Jill Horwitz recently studied the results of various company wellness programs. It’s not at all clear these programs are actually making workers healthier.
"Even if they are able to change their behavior, the evidence is pretty mixed that those behavioral changes translate into changes in health status and then changes in health spending," Horwitz says.
Even if wellness programs do work, notes RAND's Mattke, the results won’t always be immediately apparent.
"If you change somebody’s health related behavior today, it may take quite a while until you see tangible savings in health care costs," he says.
The worst consequences of unhealthy living may not show up until old age, when people are on Medicare, and taxpayers get stuck with the bill.
Mark Garrison: Companies are desperate to reduce skyrocketing health costs, and right now. . .
Soeren Mattke: Wellness is sort of the flavor of the month.
That’s Soeren Mattke of RAND. CVS is just the latest to hop on the corporate wellness program bandwagon. Data-intensive wellness programs raise red flags for people like Dr. Deborah Peel, founder of Patient Privacy Rights. CVS says it won’t see personal data, but Dr. Peel worries about the potential for abuse. And she scoffs at CVS’s description of the program as voluntary.
Dr. Deborah Peel: How many people can afford to have $600 deducted from their paycheck every year? Not that many that I know of.
UCLA law professor Jill Horwitz recently studied company wellness programs. It’s not clear they actually make workers healthier.
Jill Horwitz: Even if they are able to change their behavior, the evidence is pretty mixed that those behavioral changes translate into changes in health status and then changes in health spending.
Soeren Mattke of RAND points out that even if wellness programs do work, the results won’t always be immediately apparent.
Mattke: If you change somebody’s health related behavior today, it may take quite a while until you see tangible savings in health care costs.
The worst consequences of unhealthy living may not show up until old age, when people are on Medicare, and we, the taxpayers, get stuck with the bill. In New York, I'm Mark Garrison, for Marketplace.